Manufacturing for Growth : Brazil

The Americas’ emerging powerhouse

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Brazil's manufacturing competitiveness is expected to strengthen over the next several years. Driven by ongoing investment in infrastructure in preparation for the 2014 World Cup and 2016 Olympic Games, relevant changes in the energy sector, and other recent policy reforms, Brazil appears to be favorably positioned for the future regarding manufacturing competitiveness

The World Cup and Olympics are expected to accelerate the planned infrastructure improvements and bring in foreign investment, which will likely have a positive influence on improving the country's manufacturing industry and competitive position. Brazil is also one of the few countries with a sufficiently large natural resource base coupled with a relatively advanced research infrastructure. This places the country in a unique position to capture more profitable stages of the value chain through the use of alternative energies that are ecologically sustainable – something noted as critical by the executives participating in our interviews.

Executives believed that the following set of recommendations would enable Brazil's pursuit of more advanced manufacturing capabilities

Create programs that identify deficiencies in specific skills in demand by employers and deemed strategic to Brazil's competitiveness, and provide incentive for educational institutions and students to fill any skills gaps

Enact long-term science, technology and innovation policies and investments that evaluate the quality of the education that is being taught in the classroom today and improve technical schools and centers of excellence

Move away from being a "commodity country" and improve the promotion of strong links between education and natural resources as a driver of value-added manufacturing

Develop formal programs designed to bring companies together with universities (both in Brazil and abroad) to seek innovative technologies for products and processes

Focus on talent development, innovation and education with special emphasis on elementary education and science and technology disciplines

Develop plans and policies that provide an ability to consistently execute infrastructure initiatives at a pace that is in line with industrial development and trade

Perform a mapping of the real needs of infrastructure projects in Brazil and set a schedule for these undertakings

Develop programs that increase the involvement of the private sector in infrastructure development within a safe and legal environment

Invest in infrastructure projects that improve logistics and transportation, and therefore overall competitiveness

Develop government measures to encourage the creation of methods to improve Brazil's energy network through targets to increase the use of clean energy

Create government programmes that encourage a technological upgrade when changing old machines and equipment with new machines with lower power consumption

Increase investment in and prioritize infrastructure efforts that result in the efficient generation and distribution of renewable energy

Provide tax incentives that promote and encourage research and development initiatives that focus on sustainable, alternative energy

Reduce the tax burden on domestic industries and sectors deemed strategic to Brazil's long-term growth, thereby also attracting more foreign investments in those sectors

Simplify the tax system and reduce the tax burden on corporations

Executives also said Brazil needs adequate public policies and measures that encourage domestic production, not protectionism

Establish political, legal, and regulatory stability

Focusing on value-added manufacturing would also lead to the economic prosperity of Brazilian citizens, who would then have the purchasing power and demand for more complex goods, which would result in increased foreign investment and growth of Brazil's domestic manufacturing industry